When Jeff Bezos attended the Sun Valley Summit this year, his understanding of these media tycoons far exceeded their understanding of themselves.
This situation has also caused many media to worry a lot, especially in the case of Amazon's advertising business is growing.
Advertising business continues to grow
Thanks to its dominance in e-commerce and its huge exposure on the media side, Amazon's growing advertising business has challenged Google and Facebook's dominance.
Google’s advantage has always been to know what consumers are interested in, and Facebook knows “who are you”. But today's Amazon has the information that many people in the advertising industry value most, that is, what people buy. Now, this home appliance giant has begun to tap the true potential of these big data.
“Amazon really started to grow into a media company, and its advertising revenue is also growing substantially. But what the industry's advertising marketers really worry about is that Amazon will not open up the data. If you want to get this information, you must follow Amazon's rules. ” Brian Braiker, editor of the advertising age media, said.
At the moment, most of Amazon's revenue still comes from e-commerce and AWS cloud computing business, but its advertising business is also growing. In the first three months of 2018, the company's “Other Revenues” category, which consisted mainly of advertising revenue, increased by 139% quarter-on-quarter and reached US$2 billion for the first time.
In this regard, Michael Kassan, founder of MediaLink, an advertising and media consultancy, believes: “Interestingly, advertising is not their dominant business. This is only a small part of Amazon's overall revenue, but growth is very fast. ”
There is no doubt that Amazon has become a revolutionary company. As long as it enters an industry, the market share of the original leading companies in the industry will shrink rapidly. Moreover, the company will not hesitate to lose the performance report of years of losses, but also to beat its competitors out.
Forrester analyst Collin Colburn warned that Amazon may also adopt a similar approach in the advertising industry.
“Amazon is not playing the role of & rsquo; middleman & rsquo; in the advertising business, advertising companies are. & rdquo; Caulborn said.
The battle for the third place has entered a fever
Looking at today's digital advertising space, Facebook and Google are still two unstoppable giants, which together account for more than half of the 2018 digital advertising spending market.
At the same time, Microsoft, Twitter, Snapchat and Verizon (through its Oath subsidiary) are vying for the third place in the global digital advertising market. Digital advertising research firm eMarketer expects the market to see a 61% growth next year with a market size of $316 billion.
eMarketer also pointed out that Amazon may surpass these companies by virtue of Bezos's usual strategy. This strategy is to maintain patience and sacrifice in the short term in exchange for long-term market dominance.
Monica Peart, eMarketer's senior forecasting director, pointed out: “Amazon is now in the fifth place in the US digital advertising market and is expected to become the third in 2020. So the question now is when the company will start to make full use of its vast business reach and rich shopper data to increase advertising in other areas. ”
One of Amazon's strengths lies in its own search engine capabilities, as a consumer survey found that about half of all consumer product searches are currently on Amazon, not Google.
Therefore, the company can fully place search ads next to search results to show consumers the sponsored content of any product. These sponsored content can be labeled as "Amazon's Choice" (Amazon's Choice) or "Top Selling Product", and if it is Amazon's own product, it can display the "Amazon Basics" logo.
Financial company Genkos Securities analyst Alex DeGroote said in an interview with CNBC in April this year: "I think Amazon will launch a retail search business and challenge Google." Perhaps in the future, you will use Amazon as your retail search engine. ”
Advertising is king
What many people don't realize is that in addition to search advertising, Amazon actually has more advertising content to sell.
In recent years, Amazon has continued to expand its media business (currently including diversified content such as movies, TV and live broadcasts) and has also bundled this business with the Prime subscription membership program. Last year, the company’s advertising package for the NFL game on Thursday night reached $2.8 million. Amazon's sales team also sells ads on Fire tablets, Kindle e-readers, and the home page of the IMDB.com movie data site.
In addition, Amazon also has a social gaming platform Twitch and its derivative game forums, which can help companies sell ads directly to young, inaccessible game groups.
Amazon's voice assistant service Alexa is also not to be underestimated, although the company has not yet sold ads in this voice assistant. But there is news that once Amazon finds the best form of advertising on this platform, they are very likely to launch this advertising business. There are even reports that Amazon has invited advertising industry executives to help them plan this project.
It should be said that because the company has sufficient exposure in all industries involved, Amazon can sell ads in many channels. Seth Dallaire, vice president of global advertising sales and marketing at Amazon Media Group, said: “This allows the company to optimize its advertising services and further increase the appeal of its advertising system to consumers. ”
Make a deal with the devil
For advertisers, advertising on Amazon can provide predictable short-term opportunities, but they need to provide data and market capabilities, which may eventually lead to the loss of their lives.
In other words, companies that advertise on the Amazon search page need to exchange their valuable data for sales. But this is actually helping Amazon build a strong strength, let him know more about the real needs of consumers.
Amanda Richman, CEO of advertising company Wavemaker, said that Amazon may eventually treat marketers like Google and Facebook, causing it to lose a lot of voice.
“What kind of things have you taught them? Will sharing data benefit your competitors? The current market consensus is that you will give up a lot of control. ”
Martin Sorrell, the former CEO of multinational advertising giant WWP, also said that similar concerns have been rampant in the advertising industry.
“ One question I always ask customers is ‘What will make you wake up in the middle of the night? & rsquo; But regardless of whether the other is a retailer or a brand owner, their answers are almost always & ldquo; Amazon & rsquo;. & rdquo; Sorel finally said.